SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-QSB

[X]      Quarterly  Report Under Section 13 or 15(d) of the Securities  Exchange
         Act of 1934

                        For Quarter Ended: June 30, 2003

                                       OR

[ ]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

                         Commission File No. 000-3084133

                           AUSSIE APPAREL GROUP, LTD.
                           --------------------------
             (Exact name of registrant as specified in its charter)

         Nevada                                             52-1146119
----------------------------                        ------------------------
 (State of Incorporation)                            (I.R.S. Employer I.D.)

                       One World Trade Center, Suite 800,
                              Long Beach, Ca 90831
                            Telephone (562) 983-8045
--------------------------------------------------------------------------------
          (Address and telephone number of principal executive offices
                        and principal place of business)




Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such a period that the  registrant  was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]


As of August 7, 2003, the registrant had a total of 182,233,917 shares of common
stock issued and outstanding.


<PAGE>




                          PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

                           AUSSIE APPAREL GROUP, LTD.
                          (A DEVELOPMENT STAGE COMPANY)

                   CONSOLIDATED BALANCE SHEET - JUNE 30, 2003


                                     ASSETS

Current assets -
  cash                                                            $    15,592

                                                                  -----------
     Total Current Assets                                              15,592
                                                                  -----------


Trade names                                                         6,033,824
                                                                  -----------

                                                                  $ 6,049,416
                                                                  ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Accounts payable                                                $   203,062
  Deposits payable                                                    215,000
  Stock subscriptions received, against which                          58,119
        shares have yet to be issued
  Loans payable, related parties                                       39,000
  Notes payable                                                       440,000
  Convertible debentures, net of discount                              17,000

                                                                  -----------
          Total current liabilities                                   972,181
                                                                  -----------

Stockholders' equity:
  Preferred Series A, $10 par value; 400,000 shares issued
    and outstanding                                                 1,058,824
  Preferred Series B, $.001 par value; 610,000 shares issued
    and outstanding                                                       610
  Preferred Series C, $0.001 par value; 10,000,000 shares
    Issued and outstanding                                             10,000
  Common Stock, $.001 par value; 500,000,000 shares
    authorized; 177,019,450 shares issued and outstanding              11,525
   Deferred offering costs                                            (40,000)
   Deferred compensation                                                 --
   Common stock subscriptions receivable                             (112,500)
  Additional Paid in Capital                                        8,600,638
  Deficit accumulated during the development stage                 (4,451,862)

          Total stockholders' equity                                5,077,235
                                                                  -----------

                                                                  $ 6,049,416
                                                                  ===========


                   The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       2
<PAGE>


<TABLE>
<CAPTION>


                           AUSSIE APPAREL GROUP, LTD.
                          (A DEVELOPMENT STAGE COMPANY)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                    FOR THE
                                                                                  PERIOD FROM
                                                                                  INCEPTION ON
                                     FOR THE THREE          FOR THE SIX          AUGUST 26, 2002
                                      MONTHS ENDED         MONTHS ENDED             THROUGH
                                     JUNE 30, 2003         JUNE 30, 2003         JUNE 30, 2003
                                   -------------------     -------------         -------------

<S>                                  <C>                   <C>                   <C>
Income                               $        --           $        --           $        --
                                     -------------         -------------         -------------
Expenses -
 General and administrative               (945,949)           (1,365,100)           (1,501,161)

 Stock issuance expense                   (166,101)             (166,101)             (166,101)

 Costs associated with cancellation
  of options                            (2,784,600)           (2,784,600)           (2,784,600)
                                     -------------         -------------         -------------


          Total expenses                (3,896,650)           (4,315,801)           (4,451,862)
                                     -------------         -------------         -------------

Net loss                             $  (3,896,650)           (4,315,801)        $  (4,451,862)
                                     =============         =============         =============


Basic and diluted - loss per share           (0.02)                (0.03)                 --
                                     =============         =============         =============

Weighted average common shares -
  basic and diluted                    170,655,998           171,338,347                  --
                                     =============         =============         =============


</TABLE>
                   The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                              AUSSIE APPAREL GROUP, LTD.
                            (A DEVELOPMENT STAGE COMPANY)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                     FOR THE
                                                                                                  PERIOD FROM
                                                                                                  INCEPTION ON
                                                     FOR THE THREE          FOR THE SIX         AUGUST 26, 2002
                                                      MONTHS ENDED         MONTHS ENDED             THROUGH
                                                     JUNW 30, 2003         JUNE 30, 2003         JUNE 30, 2003
                                                   -------------------     -------------         -------------
<S>                                                    <C>                   <C>                   <C>
Cash flows (used for) operating activities:
  Net loss                                             $(3,896,650)          $(4,315,801)          $(4,451,862)


  Adjustments to reconcile net loss to net cash
    provided by (used for) operating activities:
     Write off of non-used assets                             --                    --                   6,960
     Stock issued for employee compensation/services       203,912               328,662               328,662
     Stock issued for debt conversion costs                   --                  78,750                78,750
     Series C Preferred shares issued in exchange          367,500               367,500               367,500
             for services
     Discount on stock issued                              166,101               166,101               166,101
     Notes and loans payable issued for services           413,000               413,000               413,000
     Cost associated with cancellation of options        2,784,600             2,784,600             2,784,600
  Changes in operating assets and liabilities:
    (Increase) decrease in assets -
      intangibles                                             --                    --                (250,000)

    Increase (decrease) in liabilities:
      Accounts payable                                    (103,130)               74,049               203,062
      Deposits payable                                        --                 (10,000)              215,000

          Total adjustments                              3,831,983             4,202,662             4,313,635

          Net cash used for operating activities           (64,667)             (113,139)             (138,227)
                                                       -----------           -----------           -----------

Cash flows provided by financing activities-
  Issuance of convertible debentures                        25,000                25,000                25,000
  Proceeds of notes and loans payable                       40,000                40,000                66,000
  Proceeds of stock subscriptions                           14,923                62,819                62,819
                                                       -----------           -----------           -----------

   Net cash provided by financing activities                79,923               127,819               153,819
                                                       -----------           -----------           -----------
Net increase in cash                                        15,256                14,680                15,592
Cash and cash equivalents, beginning of period                 336                   912                  --
                                                       -----------           -----------           -----------


Cash and cash equivalents, end of period               $    15,592           $    15,592           $    15,592
                                                       ===========           ===========           ===========


Supplemental disclosure of non-cash financing
 and investing activities:
    Shares issued for trademarks                              --                    --               5,985,000
                                                       ===========           ===========           ===========

    Common Stock subscriptions receivable                     --                112,500               112,500
                                                       ===========           ===========           ===========

    Common stock issued for services, accounted for
         as deferred offering costs                           --                 40,000                40,000
                                                       ===========           ===========           ===========

</TABLE>

                   The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       6
<PAGE>
<TABLE>
<CAPTION>

                                                                         AUSSIE APPAREL GROUP, LTD.
                                                                       (A DEVELOPMENT STAGE COMPANY)

                                                              CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                                                      FOR THE PERIOD FROM INCEPTION ON
                                                                 AUGUST 26, 2002 THROUGH JUNE 30, 2003

(SPLIT TABLE - CONTINUED ON NEXT PAGE)


                                            Series A Pfd Stock     Series B Pfd Stock    Series C Pfd Stock     Common Stock
                                             Shares      Amount     Shares   Amount       Shares    Amount    Shares     Amount
                                            ----------  ---------  --------- --------    ---------  -------- ----------  --------

<S>                                         <C>         <C>        <C>       <C>         <C>        <C>      <C>         <C>
At inception on August 26, 2002, as
  restated for effect of reverse
  merger with Aussie Apparel
  (see Note  1 )                                 --     $    --       --     $    --         --     $   --   137,090,430  $ 1,000

Shares issued in connection with
  merger with Aussie Apparel,
  October 29, 2002 (see Note 1 )                 --          --    610,000        610        --         --         --       2,639

Shares issued for acquisition
  of tradenames                              400,000   1,058,824      --         --          --         --    31,500,000    2,100

Net loss December, 31 2002                       --          --       --         --          --         --         --
                                          ----------   --------- ---------   --------    ---------- --------  ----------  --------

Balance at December 31, 2002                 400,000   1,058,824   610,000        610        --         --   168,590,430    5,739

Shares issued for compensation,
   services and deferred offering costs          --          --       --         --      10,000,000  10,000    1,198,125       80
Shares issued to a foreign entity for resale,
   and recorded on balance sheet as stock
   subscription receivable                       --          --       --         --          --         --       750,000       50
Shares issued in connection with conversion of
   convertible debentures                        --          --       --         --          --         --       525,000       35
Creation of stock option / deferred
  compensation plan                              --          --       --         --          --         --          --        --

Shares issued for compensation
   and other servoces.                           --          --       --         --          --         --     4,993,748    4,883
Stock issued in connection with rescission
   of employee stock options                     --          --       --         --          --         --       682,147      682
Stock issued  in connection
   with stock subscription                       --          --       --         --          --         --       280,000       56
Rescission of stock option / deferred
   compensation plan                             --          --       --         --          --         --          --       --


Net loss June 30, 2003                           --          --       --         --          --         --          --       --
                                          ----------   --------- ---------   --------    ----------  --------  -----------  --------
Balance at June 30, 2003                     400,000  $1,058,824   610,000   $    610    10,000,000 $  10,000  177,019,450  $ 11,525
                                          ==========   ========= =========   ========    ==========  ========  ===========  ========

                   The accompanying notes are an integral part
                  of these consolidated financial statements.

</TABLE>

(continued)

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                        AUSSIE APPAREL GROUP, LTD.
                                                                       (A DEVELOPMENT STAGE COMPANY)

                                                              CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                                                      FOR THE PERIOD FROM INCEPTION ON
                                                                 AUGUST 26, 2002 THROUGH DECEMBER 31, 2002

(SPLIT TABLE - CONTINUED FROM PREVIOUS PAGE)



                                                                                                          Deficit
                                                    Less stock    Less deferred   Stock options   Add'l   accumulated    Total
                                                    subscription     offering     deferred       paid-in  during devel-  Stkholder
                                                    receivable        cost        compensation   capital  opment stage   Equity
                                                    ------------  -------------   ------------  --------- -------------  ----------

<S>                                                 <C>           <C>             <C>            <C>       <C>          <C>
At inception on August 26, 2002, as
  restated for effect of reverse
  merger with Aussie Apparel
  (see Note  1 )                                    $   --         $     --       $     --       $   --    $     --     $   1,000

Shares issued in connection with
  merger with Aussie Apparel,
  October 29, 2002 (see Note 1 )                        --               --             --          2,711        --          5,960

Shares issued for acquisition
  of tradenames                                         --               --             --      4,722,900        --      5,783,824

Net loss December, 31 2002                              --               --             --           --      (136,061)    (136,061)
                                                    ------------  -------------   ------------  --------- -------------  ----------

Balance at December 31, 2002                            --               --             --      4,725,611    (136,061)   5,654,723


Shares issued for compensation,
   services, and deferred offering costs                --            (40,000)          --        854,670        --        824,750
Shares issued to a foreign entity for resale,
   and recorded on balance sheet as stock
   subscription receivable                          (112,500)            --             --        112,450        --           --
Shares issued in connection with conversion of
   convertible debentures                               --               --             --         78,715        --         78,750
Creation of stock option/deferred
  compensation plan                                    --               --       (2,784,600)   2,784,600        --           --

Shares issued for compensation
   and other services.                                  --               --             --        350,230        --        355,113
Stock issued in connection with rescission
   of employee stock options                            --               --             --         47,068        --         47,750
Stock issued  in connection
   with stock subscription                              --               --             --         19,544        --         19,600
Rescission of stock option/deferred
   compensation plan                                    --               --        2,784,600     (380,250)       --      2,404,350
Issuance of convertible debenture
   with beneficial conversion feature                   --               --             --          8,000        --          8,000

Net loss June 30, 2003                                  --               --             --           --    $(4,315,801) (4,315,801)
                                                    ------------  -------------   ------------  --------- -------------  ----------
Balance at June 30, 2003                            $ (112,500)   $   (40,000)    $     --     $8,600,638 $(4,451,862) $ 5,077,235
                                                    ============  =============   ============  ========= ============= ===========
</TABLE>
<
                   The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       8
<PAGE>

         (1) Description of Business:

         Organization and Business:

                  Mercury Software,  a Nevada  corporation,  was incorporated on
                  January 29,  1997 and its name was  changed to Medex Corp.  on
                  June 24, 2002.  Aussie  Apparel Group Ltd.  (the  "Company" or
                  "Aussie Apparel"),  a Nevada corporation,  was incorporated on
                  August 26, 2002. The Company is currently a development  stage
                  enterprise  under the  provisions  of  Statement  of Financial
                  Accounting Standards ("SFAS") No. 7.

                  In October 2002, Medex Corp.  issued an aggregate of 6,500,000
                  (pre-stock   split)   shares  of  its  common   stock  to  the
                  shareholders  of Aussie Apparel Group Ltd. in connection  with
                  the merger of Aussie Apparel with Medex Corp.,  whose name was
                  then  changed to  "Aussie  Apparel  Group Ltd" on October  21,
                  2002.  Since the  shareholders  of Aussie  Apparel  became the
                  controlling  shareholders of MedEx after the exchange,  Aussie
                  Apparel  has  been  treated  as the  acquirer  for  accounting
                  purposes.  Accordingly,  the financial statements as presented
                  are the historical  financial statements of Aussie Apparel and
                  include  the  transactions  of  Medex  only  from  the date of
                  acquisition, using reverse merger accounting.

                  Aussie Apparel Group owns brand names,  and has signed letters
                  of intent to acquire  additional brand names, all of which are
                  focused  on  providing  apparel  to the  action  sports  area,
                  including  surfing,  wakeboarding,   and  skateboarding.   The
                  Company  plans to develop high tech  garments for athletes and
                  participants  in these sports as well as designing more casual
                  lifestyle  clothing  aimed at a wider range of consumers.  The
                  Company plans to begin manufacturing & marketing under various
                  brand names. "Hot Tuna" will manufacture  apparel for both men
                  and women,  and will be marketed to  independent  sport shops,
                  boutiques and high-end  department  stores.  The "Piranha Boy"
                  and  "Piranha  Girl"  lines  were   established  to  focus  on
                  supplying   fashionable  clothes  to  the  children's  apparel
                  segment.

                  The  Company has also signed a letter of intent to acquire the
                  "Bluetorch" trade name, and plans to market related apparel to
                  high end sporting goods stores, mid-tier department stores, as
                  well as specialty chains.  The "November" and "TSA" names, for
                  which a letter of intent  was  signed  July 8,  2003,  will be
                  marketed  to  specialty  shops  (November)  and  to  high  end
                  sporting goods and specialty chains (TSA).

                  On April 7, 2003 the  Company  effected a 3 to 1 stock  split,
                  followed on May 27, 2003 by an  additional 5 to 1 stock split.
                  The  accompanying  financial  statements have been restated to
                  reflect these stock splits for all periods presented.

                  On June 15, 2003,  the Company's  Board of Directors  approved
                  the formation of a new company,  Unboxed Distributions,  Inc.,
                  into which the  Company  subsequently  transferred  all of its
                  trade names and operations, in exchange for 100% of the common
                  stock of  Unboxed  Distributions,  Inc.  Accordingly,  Unboxed
                  Distributions,  Inc.  is a  wholly  owned  subsidiary  of  the
                  Company  and has been  treated  as such in these  consolidated
                  financial   statements.    All   intercompany   accounts   and
                  transactions have been eliminated in consolidation.

                          Interim Financial Statements:

         The   accompanying   financial   statements   include  all  adjustments
         (consisting  of only  normal  recurring  accruals),  which are,  in the
         opinion of management, necessary for a fair presentation of the results
         of  operations  for the  periods  presented.  Interim  results  are not
         necessarily  indicative  of the results to be expected for a full year.
         The  financial  statements  should  be read  in  conjunction  with  the
         financial  statements  included in the annual report of Aussie  Apparel
         Group LTD on Form 10-KSB for the year ended December 31, 2002.

                                       9
<PAGE>

         Going Concern:

         The accompanying  financial statements have been prepared in conformity
         with accounting  principles  generally accepted in the United States of
         America,  which  contemplate  continuation  of the  Company  as a going
         concern. As of June 30, 2003, the Company has generated no revenues and
         has incurred losses totaling  $4,451,862 for the period from August 26,
         2002 (inception) through June 30, 2003. These matters raise substantial
         doubt about the Company's ability to continue as a going concern. These
         financial  statements  do not include any  adjustments  relating to the
         recoverability and classification of recorded asset amounts, or amounts
         and  classification  of liabilities  that might be necessary should the
         Company be unable to continue as a going concern.

         Management  plans to take the following  steps that it believes will be
         sufficient  to provide  the  Company  with the  ability to  continue in
         existence.

         o    The Company is focusing on development and launch of its currently
              owned  brands  into  the  US  domestic   and   Canadian   markets.
              Accordingly,  the Company  plans to begin  shipping the "Hot Tuna"
              brand to retail in the US and  Canada in the 4th  quarter of 2003,
              and the Piranha Boy and Piranha  Girl brands in the 1st quarter of
              2004.

         o    The Company believes its portfolio of brands have established name
              recognition  in various  international  markets,  and is moving to
              sign on international  licensees and distributors to maximize this
              brand awareness. The Company entered into a licensing agreement on
              April 9, 2003 with Frontier International  (Holdings) Pty, Ltd. of
              Australia,  a  shareholder,  for the  territory,  which  includes;
              Australia,  New  Zealand,  New  Caledonia,  Fiji,  and the Pacific
              Islands on an exclusive  basis,  and  Malaysia and  Indonesia on a
              non-exclusive basis. The agreement with Frontier  International is
              for 10 years  with  Aussie  Apparel  Group  having the option on a
              second 10-year term.  This  agreement  calls for a 6% royalty with
              minimum  royalties of approximately  $47,000 in 2003,  $198,000 in
              2004,  $343,000  in 2005,  $559,000  in 2006 and  $794,000 in 2007
              (based on exchange  rates for Australia  dollar in effect at March
              31,  2003)

         o    On April 1, 2003, the Company entered into an Investment Agreement
              with a shareholder  whereby the shareholder  agreed to purchase up
              to $4,000,000 of the Company's common stock over a 24-month period
              ending April 1, 2005.

         o    On June 19,  2003,  the  Company  became a  "Business  Development
              Company"  pursuant  to  applicable  provisions  of the  Investment
              Company  Act of 1940.  In July 2003,  and  pursuant to an Offering
              Circular dated June 19, 2003, the Company sold 5,000,000 shares of
              its common stock.

         o    Additionally,  the Company has been working to acquire  additional
              trade  names,  and on June 13,  2003  signed a letter of intent to
              acquire the "Bluetorch"  tradename.  The Company hopes to complete
              its  acquisition  of the Bluetorch  name during the 3rd quarter of
              2003,  and plans to begin  shipping  product in the 4th quarter of
              2003.  Also, on July 8, 2003, the Company signed another letter of
              intent to  acquire  the trade  names  "November"  and  "TSA".  The
              Company plans to begin  shipping  product  bearing these labels as
              soon as the trade name  acquisition has been finalized,  which the
              Company anticipates will be during the 3rd quarter of 2003.

                                       10
<PAGE>
Summary of Significant Accounting Policies

Basic and Diluted Earnings (Loss) Per Share:

Basic  earnings  (loss) per share are  determined  by dividing  the net earnings
(loss) by the weighted  average  shares of Common Stock  outstanding  during the
period.  Diluted  earnings  (loss) per share are  determined by dividing the net
earnings (loss) by the weighted average shares of Common Stock  outstanding plus
the  dilutive  effects  of  stock  options,   warrants,  and  other  convertible
securities.  537,000  common  stock  equivalents,   representing  common  shares
eligible to be converted in relation to Preferred  Stock,  calculated  using the
market  price  on June  30,  2003,  and  options  have  been  excluded  from the
calculation of diluted loss per share, as their effect would be anti-dilutive.

Comprehensive Income:

SFAS No. 130, "Reporting  Comprehensive  Income," establishes  standards for the
reporting  and  display  of  comprehensive  income  and  its  components  in the
financial  statements.  As of June 30,  2003,  the  Company  has no  items  that
represent  comprehensive  income and, therefore,  has not included a schedule of
comprehensive income in the financial statements.

Recent Accounting Pronouncements

During  April 2003,  the FASB issued SFAS 149 - "Amendment  of Statement  133 on
Derivative Instruments and Hedging Activities",  effective for contracts entered
into or modified  after June 30,  2003,  except as stated  below and for hedging
relationships  designated  after June 30, 2003.  In  addition,  except as stated
below,  all provisions of this Statement  should be applied  prospectively.  The
provisions of this Statement that relate to Statement 133 Implementation  Issues
that have been effective for fiscal  quarters that began prior to June 15, 2003,
should  continue to be applied in  accordance  with their  respective  effective
dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases
or sales of when-issued  securities or other  securities  that do not yet exist,
should be applied to both  existing  contracts  and new  contracts  entered into
after June 30, 2003.  The Company  does not  participate  in such  transactions,
however, it is evaluating the effect of this new pronouncement, if any, and will
adopt FASB 149 within the prescribed time.

During May 2003,  the FASB issued SFAS 150 - "Accounting  for Certain  Financial
Instruments with Characteristics of both Liabilities and Equity",  effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15, 2003. This Statement  establishes standards for how an issuer classifies and
measures certain financial  instruments with characteristics of both liabilities
and  equity.  It  requires  that an issuer  classify  a  freestanding  financial
instrument  that is  within  its  scope  as a  liability  (or an  asset  in some
circumstances).  Many of those instruments were previously classified as equity.
Some of the  provisions  of this  Statement  are  consistent  with  the  current
definition  of  liabilities  in FASB  Concepts  Statement  No.  6,  Elements  of
Financial  Statements.  The  Company  is  evaluating  the  effect  of  this  new
pronouncement and will adopt FASB 150 within the prescribed time.

         (2) Notes Payable

$440,000 of notes, payable to four entities. $400,000 of the total is payable on
demand,  or by May 31, 2005, and was issued in exchange for consulting and other
services,  and  carries  interest at 8% per year  payable  with  principal.  The
$40,000 balance will be converted into common shares.

                                       11
<PAGE>

         (3) Convertible debentures payable:

On April 1, 2003 the Company  issued a $25,000  convertible  debenture  payable,
convertible at holder's option into common shares at a price equal to the lesser
of 75% of the  lowest  closing  bid  price  over the 15  trading  days  prior to
conversion,  or 100% of the average  closing prices bid over the 20 trading days
prior to conversion.  The convertible  debentures  accrue 6% interest per annum,
payable upon conversion,  and mature on April 1, 2007. The discount attributable
to the value of the warrants amounted to $8,333,  which amount will be amortized
using the effective  interest rate method over the life of the  debenture.  Upon
conversion  of the debt,  any  unamortized  debt issue  costs will be charged to
expense.

         (4) Stockholders' Equity

During the six months ended June 30, 2003,  the Company  received  funds for the
issuance if common  shares,  against  which $4,700 of these funds was applied to
the  issuance  of 280,000  shares (as  adjusted  for stock  splits) at a $14,900
discount  from market.  As no additional  shares have been issued  against these
funds,  the balances of funds received have been reflected as a liability in the
accompanying financial statements.

During the six months ended June 30, 2003, the Company issued  6,191,873  shares
of common  stock  (adjusted  for  splits) to  employees,  consultants  and other
vendors, for services, for a cost of $519,863, the market value of the shares on
the  dates  issued.  The  total  cost  has  been  reflected  in  charges  to the
accompanying  financial  statements,  broken down as follows:  $479,863 has been
included  in General and  administrative  expense;  $40,000 has been  charged to
deferred  offering costs;  the balance of $151,201,  representing the difference
between the value of services  rendered and the market  value of shares  issued,
has been charged to Share issue discount.

During the six months ended June 30, 2003,  the Company issued 682,147 shares of
common  stock to five  current,  and  former  employees  in  exchange  for their
agreement to the  rescission by the Company of  33,150,000  options (as adjusted
for the 5:1 split which took effect May 21, 2003) which had been granted  during
the quarter  ended March 31, 2003.  The full $47,750  cost of these  shares,  at
market value at date of issuance,  has been  charged to  "write-off  of deferred
compensation" expense on the accompanying financial statements.

During the six months ended June 30,2003,  the Company issued 525,000 shares (as
adjusted  for  splits)  of  common  stock  to  former   holders  of  convertible
debentures,  which had been  converted  to Series B Preferred  Stock  during the
period from inception through December 31, 2002, as satisfaction for an offer of
inducement  to convert.  $78,750,  the market value of the shares on the date of
issuance, has been reflected as debt conversion costs.

On March 7, 2003,  the Company issued 750,000 shares (as adjusted for splits) of
common stock, valued at their market value of $112,500,  to a foreign entity for
resale  under  Regulation  S. As these  shares  have not yet been  resold by the
foreign entity,  and no  consideration  has been received,  the shares have been
reflected in Common stock subscriptions receivable on the accompanying financial
statements.


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<PAGE>


         (5) Rescission of Options

Previously,  during the  quarter  ended  March 31,  2003,  the  Company  granted
33,150,000 options to employees (after giving effect to two forward splits), all
of which would have vested March 2004 through March 2007. In accordance with APB
25, a $2,784,600  compensation cost was included in deferred compensation costs,
to be recognized over the future vesting period.

During the quarter ended June 30, 2003,  the Company  obtained  agreements  from
employees to rescind all of those options,  in exchange for a lesser quantity of
common  shares  to  be  issued  immediately,  as  explained  in  note  2  above.
Accordingly,  the $2,784,600 option cost, previously deferred,  has been charged
to operations in the current period.


         (6) Subsequent Events

On June 13,  2003,  the  Company  signed a  letter  of  intent  to  acquire  the
"Bluetorch"  trade name and related rights to the "Bluetorch"  brand for a price
of  $200,000,  payable  $50,000 in cash plus  $150,000 in the  Company's  common
stock.  Additionally,  the  Company  would pay a  royalty  of 2% of net sales of
Bluetorch product over a period of ten years.

On July 8, 2003, the Company signed a letter of intent to acquire certain assets
of TSA Brand Inc and November Clothing Company,  for the total purchase price of
$3,500,000,  to be paid  $100,000  in cash,  with  the  balance  payable  in the
Company's common and preferred stock.

During the month of July 2003,  the Company  issued a total of  5,214,467 of its
common shares, broken down as follows:  14,367 shares in partial satisfaction of
stock  subscription  previously  received,  200,000  shares in  satisfaction  of
$13,000 of loans payable to related  parties,  and  5,000,000  shares sold to an
investment firm for resale to investors.

As previously  disclosed,  in December  2002 the Company  acquired the Hot Tuna,
Xisle,  and Piranha Boy and Piranha Girl brands and trade names from  Federation
Group  Limited  ("FGL"),  in  exchange  for cash,  common  stock,  and  Series A
Preferred  Stock.  Subsequently,  the  Company  and FGL have  been  involved  in
negotiations to amend the original acquisition agreement. While no comprehensive
agreement  has been  reached,  the  amendment  as currently  contemplated  would
require the Company to return all of the  trademarks  and related assets to FGL,
and then to reacquire  only the North American  rights to the Hot Tuna,  Piranha
Boy and Piranha  Girl  tradenames.  Also,  the Company  would agree to cancel or
assign to FGL two  agreements  pursuant to which the Company had licensed  sales
and distribution right for Australia, the Pacific, and the United Kingdom.

In the absence of a final agreement, and as it has been determined that there is
no in  impairment  of the  existing  trademarks  as acquired  under the original
agreement, no related adjustment has been included in the accompanying financial
statements. However, when and if the Company and FGL reach an agreement to amend
the original contract, it may result in a significantly reduced valuation of the
tradenames as currently  presented on the Company's balance sheet,  along with a
corresponding  reduction  in  the  valuation  of  common  and  preferred  shares
outstanding.


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<PAGE>

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

This  information  statement  contains  forward-looking   statements.  For  this
purpose,  any statements  contained herein that are not statements of historical
fact may be deemed to be forward-looking statements.  These statements relate to
future events or to our future  financial  performance.  In some cases,  you can
identify  forward-looking  statements by terminology such as "may,"  "predicts,"
"should,"   "expects,"   "plans,"   "anticipates,"    "believes,"   "estimates,"
"potential,"  or  "continue"  or the negative of such terms or other  comparable
terminology. These statements are only predictions. Actual events or results may
differ  materially.  There are a number of factors  that could  cause our actual
results  to differ  materially  from  these  indicated  by such  forward-looking
statements.  These  factors  include but are not limited to economic  conditions
generally  and in the  industries  in  which  Aussie  Apparel  Group,  Ltd.  may
participate;  competition  within Aussie Apparel Group,  Ltd.'s chosen industry,
including competition from much larger competitors;  technological  advances and
failure  by  Aussie  Apparel  Group,   Ltd  to  successfully   develop  business
relationships.

Although  we believe  that the  expectations  reflected  in the  forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  level  of
activity,   performance,   or   achievements.   Moreover,   we  do  not   assume
responsibility  for  the  accuracy  and  completeness  of  such  forward-looking
statements. We are under no duty to update any of the forward-looking statements
after the date of this  information  statement  to conform  such  statements  to
actual  results.  The foregoing  management's  discussion and analysis should be
read in  conjunction  with the  Company's  financial  statements  and the  notes
herein.

Critical Accounting Policy and Estimates

Our Management's  Discussion and Analysis of Financial  Condition and Results of
Operations section discusses our consolidated  financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues and expenses  during the  reporting  period.  On an on-going
basis,  management  will evaluate its estimates and judgments,  including  those
related to revenue  recognition,  accrued expenses,  financial  operations,  and
contingencies  and litigation.  Management will base its estimates and judgments
on  historical  experience  and on various other factors that are believed to be
reasonable  under the  circumstances,  the  result  of which  form the basis for
making judgments about the carrying value of the assets and liabilities that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates  under  different  assumptions  or  conditions.  The most  significant
accounting  estimates  inherent in the  preparation of our financial  statements
include  estimates as to the  appropriate  carrying  value of certain assets and
liabilities  which are not  readily  apparent  from other  sources,  such as the
deferred  tax asset  valuation.  These  accounting  policies  are  described  at
relevant  sections  in this  discussion  and  analysis  and in the  notes to the
consolidated  financial  statements  included  in our  Quarterly  Report on Form
10-QSB for the quarter ended June 30, 2003.


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<PAGE>

Liquidity and Capital Resources

We had cash and cash equivalents totaling $15,592 as of June 30, 2003. Our other
assets were intangibles (Tradenames) valued at $6,033,824.  Total assets at June
30, 2003 were  $6,049,416.  At June 30, 2003 our total  liabilities  of $972,181
represented $203,063 of accounts payable, $215,000 the remaining balance payable
against purchase of Tradenames,  $39,000 of loans payable to related parties,  a
$17,000 convertible debenture (net of offsetting beneficial conversion fracture)
carrying interest at 6%, notes payable of $400,000,  and the obligation to issue
securities in the amount of $98,119  representing the net proceeds received from
the private  placement of our securities.  The $215,000  balance relating to the
purchase of Tradenames will be reduced to $77,500,  subsequent to June 30, 2003,
through  the  issuance  of common  stock to the  sellers.  The  proceeds  of the
shareholder  loans were used both for  working  capital as well as for a partial
payment against the trade name purchase.

Our Plan of Operation for the Next Twelve Months

As of June 30, 2003, we have generated no revenue.  We hope to generate  revenue
in the next twelve months by focusing on the launch of our newly  acquired trade
names.  We plan to begin  shipping  the Hot Tuna  brand to  retailers  in the US
market in the 4th quarter of 2003, the Piranha label in the 3rd quarter of 2004.
Once  tradename  acquisitions  have been  completed,  we plan to begin  shipping
November  and TSA product in the 3rd quarter of 2003,  and  Bluetorch in the 4th
quarter of 2003.

In order to properly  develop and market our new product lines, we have incurred
additional expenses,  which are reflected in our statement of operations for the
six months ended June 30, 2003.  The operating loss of $4,315,801 for the period
represents  expenses including design and sampling costs of $124,048,  sales and
marketing  of  $140,551,  general and  administrative  costs  (including  legal,
accounting and compensation to the chief executive  officer) totaling  $229,751.
Other  expenses  include   investment  banking  and  related  services  totaling
$792,000,  as well as  $166,101,  representing  the cost of  discounts  given on
shares  issued  during the period.  This loss also includes a one time charge of
$78,750  resulting  from the  issuance  of  525,000  shares of  common  stock in
connection with the conversion of Debentures  into Series B Preferred  Stock, as
well as another one time charge of $2,784,600,  related to the rescission of the
Company's previously reported deferred compensation plan.

Failure to successfully market and promote our products would hinder our ability
to increase the size of our operations and generate additional  revenues.  If we
are not  able to  generate  additional  revenues  adequate  to  cover  increased
operating costs, our business may ultimately fail.

We have cash equivalents of $15,592 as of June 30, 2003.  Subsequent to June 30,
2003, the Company received  proceeds of $45,000 from the sale of its securities.
The Company has  received  commitments  from third  parties to raise  additional
capital from the sale of its securities. In the opinion of management, available
cash is not sufficient to fund current operations.  However, management believes
that it can obtain adequate capital via issuance and sale of its securities.

Other than on-going  merchandising  and design of our seasonal product lines, we
are  not,  nor  do  we  anticipate,  conducting  any  research  and  development
activities.  In the event  that we expand  our  sales and  customer  base or, in
particular, if we were to develop or acquire additional trade names, we may need
to hire additional  employees or independent  contractors as well as purchase or
lease additional equipment.

ITEM 3.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the  end of the  period  covered  by  this  report,  the  Company's  Chief
Executive  Officer and the Chief Financial  Officer carried out an evaluation of
the  effectiveness  of the design and  operations  of the  Company's  disclosure
controls and procedures.  The Company's  disclosure  controls and procedures are
designed to ensure that  information  required to be disclosed by the Company in
its  periodic SEC filings is recorded,  processed  and reported  within the time
periods specified in the SEC's rules and forms. Based upon that evaluation,  the
Chief  Executive  Officer and the Chief  Financial  Officer  concluded  that the
Company's  disclosure  controls and procedures are effective in timely  alerting
him to material  information  relating to the Company required to be included in
the Company's periodic SEC filings.

                                       15
<PAGE>

Changes in Internal Controls

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.


                           PART II: OTHER INFORMATION


ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

                              None.
(b) Reports on Form 8-K.

(1)      Form 8-K, dated February 21, 2003, Item 4, 5 & 7.
(2)      Form 8-K/A dated March 18, 2003, Item 7.
(3)      Form 8-K dated May 31, 2003, Item 5.


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                           AUSSIE APPAREL GROUP LTD.

August 18, 2003                            By:/s/ Bruce MacGregor
                                           ---------------------------
                                           Bruce MacGregor, President



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